Global Witness | Financing a parallel government? | Zimbabwe | June 2012

FINANCING A PARALLEL GOVERNMENT?

The involvement of the secret police and military in Zimbabwe’s diamond, cotton and property sectors

1 Global Witness | Financing a parallel government? | Zimbabwe | June 2012

signed just weeks after security forces Executive Summary killed over 150 protestors and raped over 100 women in a stadium. This report reveals how Zimbabwe’s feared secret police, the Central This briefing extends the Economist’s Intelligence Organisation (CIO), appears analysis of the Queensway syndicate’s to have received off-budget financing activities in Zimbabwe. Several reliable from Sam Pa, a businessman based in sources within the secret police have Hong Kong; and how members of the passed information to Global Witness CIO are directors of a group of demonstrating how Sam Pa appears to companies, Sino Zimbabwe have provided a significant sum of Development*, registered in Zimbabwe, money, said by one CIO document seen Singapore and the British Virgin Islands. by Global Witness to be $100 million, to the CIO. The same sources, Several well informed sources have told corroborated by another source with Global Witness Sam Pa (AKA Antonio firsthand knowledge of the deal, also Famtosonghiu Sampo Menezes, Xu describe how Sam Pa provided 200 Jinghua and Sam King) holds leadership Nissan pick-up trucks to the CIO. In positions in a network of companies return, Sam Pa received diamonds and known as the Queensway syndicate. The accessed business opportunities in the syndicate was the subject of a detailed cotton and property development study by the Economist in 2011. This sectors. As figure 1 shows we also use study concluded that syndicate has a company registry records and sources track record of opaque ‘resources for within the secret police to identify three infrastructure’ deals across sub-Saharan Zimbabwean directors (Gift Kalisto Africa. Despite the official sounding Machengete, Pritchard Zhou and names of its companies, such as China Masimba Ignatius Kamba) of Sino International Fund and Africa Zimbabwe Development in Zimbabwe, Development Corporation, the syndicate Singapore and the British Virgin Islands is largely owned by private Hong Kong who are members of the CIO, and which business interests. Until recently some we therefore believe to be companies of the key companies, such as China which are controlled in part by members Sonangol International Ltd, were also of the Zimbabwean secret police. Global partly controlled by a leading Angolan Witness invited Sam Pa and the directors politician, Manuel Vicente, the former of Sino Zimbabwe Development to head of Angola’s state oil company comment on our findings, and they have Sonangol. Finally, the Economist not done so. highlighted that two companies in the syndicate, China Sonangol International There are three reasons why these (S) Pte Ltd and CIF Singapore Pte Ltd, developments are of concern. are noted for an ethically dubious deal with the Guinean military junta in 2009,

* In this document we refer to ‘Sino Zimbabwe Development’ as shorthand for three companies: Sino Zimbabwe Development (Pvt) Ltd, registered in Zimbabwe; Sino Zimbabwe Development (Pte) Ltd, registered in Singapore, and Strong Achieve Holdings Ltd, registered in the British Virgin Islands. In the Zimbabwean media and other public sources there are also occasional references to Sino Zimbabwe Holdings (Pvt) Ltd and Sino Zimbabwe Cotton Holdings (Pvt) Ltd, but there is no record of these companies at the Zimbabwean company register. We have been informed by reliable sources that these unregistered companies are in effect the same company as Sino Zimbabwe Development (Pvt) Ltd – assertions backed by the fact that Jimmy Zerenie, a known director of Sino Zimbabwe Development (Pvt) Ltd, represented Sino Zimbabwe Holdings (Pvt) Ltd in the media during a cotton dispute in 2010. Finally it should be noted that ‘Sino Zimbabwe Development’ is unrelated to other companies with similar names: Sino Zim Cement Company (SZCC), registered in Zimbabwe, and Sino-Zim Mining Corporation Ltd and Sino-Zim Mining Resource Company Ltd, both registered in Hong Kong. In this document any reference to ‘Sino Zimbabwe’ or ‘Sino Zimbabwe Development’ should be taken to mean companies with connections to the Queensway syndicate rather than SZCC, Sino-Zim Mining Corporation Ltd or Sino-Zim Mining Resource Company Ltd.

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First, by its very nature any off budget Democratic Change (MDC) including financing for the secret police Prime Minister Morgan Tsvangarai, undermines democratic processes and Finance Minister Tendai Biti, and Industry institutions in Zimbabwe. Off budget Minister Welshman Ncube. According to funding subverts civilian and democratic the single source within the CIO Sam Pa’s control of the CIO, and allows the secret money was allocated specifically to police to set, and fund, its own agenda. Operation Spiderweb. However, by their Second, Sam Pa’s likely financial support very nature, such claims about secret for the CIO may undermine Zimbabwean intelligence agencies are difficult to verify democracy more directly. According to and should be treated with caution. two sources, one senior Zimbabwean Third, members of the CIO have been government official and one source repeatedly identified as perpetrators of within the CIO, the secret police is violence in the recent past, and therefore engaged in ‘Operation Spiderweb’, covert Sam Pa’s apparent material assistance activities designed to discredit senior may fund future human rights abuses in figures from the opposition Movement for the run up to the forthcoming election.

Figure 1: Ownership structure of Sino Zimbabwe Development group and Sino Zim Diamond Ltd (see annex 2 for details).*

Lo Fong Hung Veronica Fung Yuen

Owns Owns 30% 70%

Beijing Tian Qiao Cultural New Bright Int'l Dev Ltd (HK) Wu Yang Development Company (HK) Directors: Veronica Fung Yuen Lo Fong Hung

Owns Owns Owns 0.0001% 69.9999% 30%

Dayuan Int'l Development (HK) Directors: Veronica Fung Yuen Lo Fong Hung Owns 1% Owns 99%

China International Goal Achieve Alero Key Fund Ltd (HK) Holdings Ltd - companies controlled in part by CIO members Directors: Ltd (BVI) (BVI) Veronica Fung Yuen Lo Fong Hung Owns Owns 50% 50% Holds

Gift Kalisto Jimmy Strong Achieve Star Delight MIL Company Ltd Machengete Zerenie Holdings (BVI) Holdings (BVI) (HK) Authorised Authorised Directors: signatory: signatory: Owns Owns Lo Fong Hung 51% 49% Masimba Ignatius Lo Fong Hung Moshe Hallak Kamba

Sino Zim Development (Pvt) Owns Owns Owns Owns (Zimbabwe) 30% 70% 20% 80%

Directors: Lo Fong Hung Sino Zim Development Pte Veronica Fung Yuen (Singapore) Jimmy Zerenie Transferred Directors: Sino Zim Diamond Ltd $50m to (Hong Kong) Gift Kalisto Machengete Masimba Ignatius Kamba Pritchard Zhou Lo Fong Hung Directors: Alain Fanaie (joined late 2011)* Eliezer Nefussy Jimmy Zerenie

* Alain Fanaie only joined Sino Zimbabwe Development Pte, and other companies in the Queensway syndicate, in late 2011, after the events described in this report.

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Anjin is likely part-owned and part- The MDC Finance Minister has stated controlled by the Ministry of Defence that the Treasury has not received any revenues from Anjin. Global Witness has This report also revisits earlier Global received copies of receipts from Anjin for Witness research into a large diamond payments to other government bodies mining company, Anjin Investments (Pvt) but not the Zimbabwe Revenue Authority Ltd. Our last report established the and we conclude that the Finance partial control exercised by figures from Minister’s claim is plausible. This leaves the Zimbabwean military, police and two possibilities: that Anjin has used Ministry of Defence over the firm’s revenues earned so far to recoup executive board. This current briefing significant capital expenditure, or that reports the results of research into revenues have been diverted to the Anjin’s ownership. Zimbabwean company’s part owners in the military company records reveal that a senior and police. Anjin is a large diamond military lawyer in the Ministry of Defence mining company. It claims to be the holds 50 per cent of Anjin’s shares. world’s largest, and a well informed Together with factors such as the industry observer has told us that, in presence of the Permanent Secretary of terms of size, Anjin could be “the next De the Ministry of Defence on Anjin’s Beers”. If these claims are true, then executive board, these company records one explanation is that significant sums have led Global Witness to conclude that of money could flow to the Zimbabwean half of a large diamond mining company military. is likely part-owned and part-controlled by the Zimbabwean Ministry of Defence, military and police.

Key Recommendations Global Witness believes that the activities of Sam Pa, Sino Zimbabwe Development (Pvt) Ltd and Anjin Investments (Pvt) Ltd should be investigated by relevant authorities to see if their actions undermine Zimbabwean democratic institutions or risk funding future human rights abuses and therefore meet the threshold for being placed on targeted sanctions lists.

The MDC Finance Minister, when discussing Anjin, feared that “there might be a parallel government somewhere in respect of where these revenues are going.” This is a serious accusation, with profound consequences for Zimbabwe’s Government of National Unity. The Southern African Development Community (SADC) plays an active role in mediating the political process in Zimbabwe. SADC facilitators should give the problem of off-budget financing of security forces a high priority in forthcoming negotiations, with the aim of securing democratic, civilian control over the budgets for the security services. It may also be necessary for SADC to appoint an expert panel to investigate these claims.

Reform of Zimbabwe’s partisan security forces requires democratic and civilian control of their budgets. Zimbabwe’s Government of National Unity (GNU) should pass legislation banning serving and recently retired members of the military, police, the CIO and other members of the security services from control over, or beneficial ownership of, mining companies.

Consumers should not buy diamonds originating from Zimbabwe’s Marange mines until they can be certain they will not fund the Zimbabwean secret police, military and police. Companies should conduct due diligence investigations into the source of their rough diamonds. OECD member states should ask the OECD to work with industry and other interested parties to draw up supplementary guidance on how supply chain due diligence could operate in the diamonds sector.

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For example, as can be seen from the 1. Background letter below, in 2010 the Commissioner General of the Zimbabwe Republic Police ZANU PF may use violence to win (ZRP), using the name of Security Self Zimbabwe’s next election, due by 2013 Reliance Enterprises (Pvt) Ltd, applied for a concession in the diamond mining fields ZANU PF, which for many years has been of Marange.3 While this particular the governing party in Zimbabwe, has request was not granted, two other joint repeatedly used violence as a political venture companies were established: strategy. The fear of dissent, whether real or imagined, lay behind the - Sino Zimbabwe Development government’s ‘Gukurahundi’ campaign (Pvt) Ltd, with interests in diamonds, from 1982 to 1987, which killed an cotton and property, was established in 1 estimated 10,000 to 20,000 people. 2009. Section 2 of this report sets out During the last dozen years partisan evidence to support our belief that this security forces and ZANU PF supporters company was set up to provide off- used intimidation and abuses in the budget financing for Zimbabwe’s secret 2000, 2002 and 2008 elections. The police, the Central Intelligence violence in 2008 used against civil society Organisation (CIO). and supporters of the opposition - Anjin Investments (Pvt) Ltd, a Movement for Democratic Change (MDC) large joint venture diamond mining was particularly intense. The organized company, was established in December campaign involved widespread and 2009. Although Anjin was the subject of systematic abuses, which “led to the Global Witness’ last briefing4 on killing of up to 200 people, the beating Zimbabwe, in section 3 we expand our and torture of 5,000 more, and the analysis of the company and set out displacement of about 36,000 people,” evidence to support our belief that Anjin and was perpetrated by, among others, was set up to provide off-budget funding members of the ZANU PF-controlled for the Zimbabwean military and police. security forces.2 Figure 2. Request for Marange Security forces sought off-budget concession for the Zimbabwean Police sources of funding after the MDC took control of the Ministry of Finance

After the 2008 election, and following mediation by the Southern African Development Community (SADC), a Government of National Unity was formed. ZANU PF retained control of key security ministries such as the President’s Office (responsible for the Central Intelligence Organisation), Defence, and the Ministry of Mines and Mining Development. The MDC took control of the Prime Minister’s office and the Ministry of Finance. The loss of control of the Ministry of Finance set the stage for a behind-the-scenes struggle for sources of off-budget financing for partisan security forces, loyal to President Mugabe and ZANU PF.

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2. Off-budget funding of the CIO?

This section first describes the responsible for many of the human rights organisational structure of the CIO, and abuses attributed to the CIO; its close relationship with the Office of - External branch. Responsible for the President. Second, we allege that external security, including the handling three Zimbabwean directors of Sino of CIO operatives attached to Zimbabwe Development are members of Zimbabwe’s foreign embassies; the CIO. Third, we describe allegations - Security branch. Responsible for that a Hong Kong businessman named VIP security and government Sam Pa provided a large sum of money, installations; and two hundred vehicles, to the CIO. - Economics branch. Responsible Fourth, we describe how off-budget for advising the government on financing undermines Zimbabwe’s economic policy, divided into the Policy democratic institutions and we raise the Planning Unit and the Economic Analysis possibility that any financial and material Unit; and the assistance provided to the CIO could - Administrative branch. fund future human rights abuses. Finally Responsible for finance, personnel, we argue that the information provided training and transport. to Global Witness justifies the investigation of Sam Pa and Sino The CIO has no independent statutory Zimbabwe Development (Pvt) Ltd to see basis and is instead established as a whether they should be placed on Department in the Office of the international sanctions lists. President.6 Indeed CIO operatives frequently identify themselves as The Central Intelligence Organisation members of the President’s Office.7 lies within the Office of the President Official CIO finances are obscured in the Zimbabwean Treasury’s 2012 Blue Book The Central Intelligence Organisation is by being amalgamated with other Zimbabwe’s intelligence agency - or spending by the Office of the President ‘secret police’. It is a violent and Cabinet. The estimates for this organisation, loyal to the President rather budget line are US$121m in 2011, rising than Zimbabwe’s Government of National to US$206m in 2014.8 This budget is Unity. It has its roots in the colonial not subject to audit by the Comptroller regime’s police ‘Special Branch’. The General or any parliamentary oversight. organisation is reported to have about 3,000 personnel, together with a network Global Witness believes that members of informers and agents. In each of of the CIO set up a joint venture with Zimbabwe’s ten provinces the CIO is Hong Kong businessman, Sam Pa represented by a Provincial Intelligence Officer; with District Intelligence Officers The CIO sought off-budget sources of and Ground Coverage teams providing funding after the MDC took control of the local intelligence and internal security Ministry of Finance. In 2009-10 functions. members of the CIO set up Sino Zimbabwe Development, with Hong Kong Centrally, the CIO is divided into five businessman Sam Pa. Together with his branches.5 associates Ms. Veronica Fung Yuen and - Internal branch. Responsible for Ms. Lo Fong Hung, Mr. Pa runs an internal security. This is the most opaque network of companies known as politicised branch of the CIO and is the Queensway syndicate (see box 1).

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Several well placed sources within the contemporaneous news report from secret police have told Global Witness February 2010 which reported that “The that Sam Pa provided large sums of country’s notorious Central Intelligence funding to the CIO. This has been Organisation (CIO) is reported to have corroborated by a leaked CIO document, purchased an unspecified number of seen by Global Witness, which claims Nissan twincab trucks for as yet that by early 2010 Sam Pa had sent $100 unexplained reasons. … [O]ur million to the secret police, and suggests correspondent in Bulawayo reports that that the money was paid into CIO each CIO ‘district’ was given 5 vehicles to accounts rather than to the Ministry of use in their operations. … 4 of these Finance. If true, this is a significant sum: trucks (3 white and 1 grey), whose in 2011 the budget of the CIO’s parent registration numbers start with ABM, are department, the Office of the President already in use and parked outside the and Cabinet, was US $121m). Such a CIO provincial headquarters at Magnet sum would free the CIO from having to House in Bulawayo. Information remains seek funding from the Ministry of sketchy but sources with links in the Finance, and would give the CIO agency confirmed the vehicles were considerable freedom to set its own assembled in South Africa and the CIO agenda. took delivery of them in January.”9

The same sources allege that Sam Pa In return for this assistance, Sino delivered two hundred Nissan NP300 Zimbabwe Development (Pvt) Ltd was Hardbody pick up trucks to Zimbabwe. granted opportunities in the diamond, The delivery of Nissan vehicles was cotton and property sectors. These confirmed by separate sources with first business activities, and the structure of hand knowledge of the delivery, the companies, are detailed in the interviewed by JR Warner of the Africa annexes to this report. Center for Strategic Studies, author of a forthcoming report on the Queensway syndicate’s exploitation of fragile states in Africa. There is also a

Figure 3: Sam Pa in Zimbabwe. Mr Pa is businessman who is reported to hold leadership positions in a number of companies within the Queensway syndicate.

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Box 1: The Queensway syndicate

The Queensway syndicate is a network of over sixty companies led by private business interests in Hong Kong, many of which have their company address registered at 10/F Two Pacific Place, 88 Queensway, Hong Kong.10 The primary shareholders of the syndicate are two individuals: Ms. Lo Fong Hung and Ms. Veronica Fung Yuen. Mr. Sam Pa (AKA Antonio Famtosonghiu Sampo Menezes, Xu Jinghua and Sam King) is also widely reported to hold leadership positions in a number of the companies within the Queensway syndicate. Together these individuals and companies have collaborated with a number of different governments and entities across Africa and elsewhere, including most prominently, with the Angolan national oil company Sonangol.

The syndicate is known both for its opacity and, on occasion, its ethically dubious approach to doing business. In Guinea, China Sonangol International (S) Pte Ltd and CIF Singapore Pte Ltd, signed a multi-billion dollar resource-for-infrastructure11 deal with the military junta on 10 October 2009, just weeks after government forces had killed over 150 protestors, and raped over 100 women, in a sports stadium.12 While the contract had been in negotiation before the massacre, the signing of the deal, which the Economist reported included the subsequent transfer of US $100 million13 to the junta, had the effect of giving material aid to a pariah regime which shortly afterwards was placed under African Union and European Union sanctions.

The syndicate specializes in resource-for-infrastructure deals in which the right to exploit natural resources are granted in exchange for the building of railways, housing, roads and public utilities. While much of its revenue comes from Angolan oil contracts, the syndicate has been known to operate in a number of other countries, including Argentina, Congo-Brazzaville, Guinea, Singapore, Tanzania, the United States of America, Venezuela and Zimbabwe.

Figure 4: The Syndicate’s new office, at 89 Queensway, Hong Kong

Image courtesy of Tripadvisor.

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Global Witness believes that three of Embassy in China in the 1990s; Head of the Zimbabwean directors of Sino Coordination and Secretariat in the Zimbabwe Development are members President’s Department in 1998; Acting of the CIO High Commissioner at the Zimbabwean High Commission in Malaysia; and from Members of the CIO are directors of 2006 he was appointed as Deputy * three interlinked companies: Director Administration and Finance in - Sino Zimbabwe Development (Pte) Ltd, the President’s Department. 15 registered in Singapore on 12 June 2009, with directors: Lo Fong Hung, Veronica The second, Pritchard Zhou, is a director Fung Yuen, Jimmy Zerenie, Gift Kalisto of Sino Zimbabwe Development (Pvt) Machengete and Pritchard Zhou; Ltd, according to Zimbabwe’s company - Strong Achieve Holdings Ltd, registered register. Mr. Zhou has been identified as in the British Virgin Islands on 23 March a CIO operative by several sources within 2009, with authorised signatory: the secret police. In 2005 he was a Masimba Ignatius Kamba; Minister Counsellor at the Zimbabwean - Sino Zimbabwe Development (Pvt) Ltd, Embassy in South Africa.16 He is incorporated in Zimbabwe on 14 May presently Director of the Zimbabwe 2010, with directors: Masimba Ignatius National Heritage Trust.17 Kamba and Lo Fong Hung. The third, Masimba Ignatius Kamba, is Global Witness, through information identified by one source as holding a obtained from several sources within the leadership position within the CIO, has identified three of the Zimbabwean company, Sino Zimbabwe Zimbabwean directors of these Development (Pvt) Ltd, although he does companies as members of the CIO. not appear in the Zimbabwean company register. He is, however, listed as a The first, Gift Kalisto Machengete, is a director of Sino Zimbabwe Development director of the Zimbabwean company (Pte) Ltd, registered in Singapore, and as Sino Zimbabwe Development (Pvt) Ltd, the authorised signatory for Strong and holds 51% of that company’s shares, Achieve Holdings Ltd, registered in the according to records held at the British Virgin Islands. Several credible Zimbabwean company registry. Multiple sources within the CIO identified Mr. sources from within the secret police Kamba as another CIO member. identify Dr. Machengete as a Director of 14 Finance and Administration in the CIO. In addition Mr. Kamba was named in the Dr. Machengete is also currently a board media as a senior member of the CIO member of the Grain Marketing Board when, in 2010, he was the beneficiary of (GMB), and on its website he has publicly the unlawful seizure of Silverton Estate, a listed his career history as including commercial farm.18 During the seizure of employment as a research economist in the farm Kamba told the owners that he the President’s Department (parent was Director of Finance in the President's department of the CIO) from 1985-1991; Office. This claim was publicly repeated Economic Councillor at the Zimbabwean in 2010 in the newsletter of the office of the Zimbabwe Prime Minister (MDC), * Further, there is a company called Sino Zim which alleged that Mr. Kamba is the Diamonds Ltd, registered in Hong Kong on 15 April Director of Administration in the CIO.19 2010. This shares a director, Jimmy Zerenie, with In some of the court documentation Sino Zimbabwe Development (Pvt) Ltd, but Global Witness has no information to suggest that the surrounding the farm seizure Mr. Kamba CIO has any role in this Hong Kong company, nor is sometimes described as Ignatius that the directors or staff of Sino Zim Diamonds Kamba, and once gives his address as Ltd had any knowledge of any CIO involvement in ‘Sino Zimbabwe Development’.

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Private Bag 0095, Gaborone, the address Global Witness interviewed some of the of the SADC secretariat in Botswana. parties to the dispute. They alleged that during meetings between the parties, There are also several public reports of Sino Zimbabwe Cotton Holdings was men named Ignatius Kamba, Masimba represented by former members of the Kamba or I.M. Kamba, who may be the CIO. On one occasion, a currently same man, but Global Witness has not serving senior member of the CIO been able to confirm that they are one represented Sino Zimbabwe Cotton and the same person. In 1998 an Holdings.27 At District levels also Global Ignatius Kamba was a Counsellor in Witness interviewees identified local Sino Zimbabwe’s Mission to the European Zimbabwe Cotton Holdings Union.20 In 2004 in a list of the Reserve representatives as CIO officers, who Bank of Zimbabwe’s governing board an were permanently based in the areas I.M. Kamba was publicly listed as Acting where they operated and were well Director of Economics, in the President’s known to locally based cotton Department.21 A man named Masimba companies.28 Kamba was appointed to the board of the National Oil Company of Zimbabwe Sam Pa’s apparent financial support (NOCZIM) in 2006.22 Finally, in 2011, a for the CIO undermines Zimbabwean Masimba Kamba attended, as a SADC democratic processes and institutions representative, an ‘ASEAN-EU High Level Expert Workshop on Preventive By its very nature off-budget financing of Diplomacy and International Peace the security sector undermines Mediation’, held in Indonesia.23 Zimbabwean democratic processes and institutions. The cross-party Government Sino Zimbabwe Cotton Holdings, a of National Unity (GNU) should decide its company which Global Witness believes spending priorities through collective to be in effect the same company as Sino agreement in cabinet. Zimbabwe’s Zimbabwe Development (Pvt) Ltd, is National Security Council should set a accused of being represented by senior national security strategy, and the GNU ZANU PF politicians and serving and should raise taxes to fund these retired CIO officers during a 2010 dispute priorities. The process of managing over the company’s behaviour in the expenditure and raising revenues should cotton industry. In court documents24 be carried out the Ministry of Finance, senior Zanu-PF government officials are overseen by the cabinet of the GNU. alleged to have “spearheaded” the entry These processes should be scrutinized by of the company into Zimbabwe. These Parliament. Off budget financing officials include Hon. Saviour undermines Zimbabwean democracy by Kasukuwere, the Minister of Youth allowing security forces to set, and fund, Development, Indigenization and their own agenda. Empowerment; Hon. Nicholas Goche, Minister of Transport; and Assistant However, Sam Pa’s apparent support for Commissioner Martin Kwainona, a police the CIO may undermine Zimbabwean officer and member of President democracy more directly. According to a Mugabe’s personal bodyguard unit.25 Mr. source within the organisation, the CIO Goche and Mr. Kasukuwere are on both has allocated funding from Sam Pa the European Union (EU) and United towards: States sanctions lists, while Mr. Kwainona - the planned construction of a CIO is on the EU sanctions list: all three are training college. This is not to be accused of sponsoring violence.26 confused with the Military Defence College being constructed by Anhui Foreign Economic Construction (Group)

10 Global Witness | Financing a parallel government? | Zimbabwe | June 2012 and paid for with the profits from Anjin out how members of the CIO were Investments (Pvt) Ltd;29 involved in organising the violence in the - two covert operations termed 2008 election, which focused on Operation Black Hawk and Operation supporters of the opposition MDC. For Spiderweb, designed to discredit Prime example: Minister Tsvangarai, Finance Minister Biti, - in Muzarabani North and South and Hon. Welshman Ncube ahead of the and Mazowe North a CIO operative was next election; allegedly in charge of local bases where - the training of CIO operatives victims were murdered;31 jamming the radio stations Voice of - in Mount Darwin South a senior America and SW Radio Africa. The CIO official is alleged to have part jamming is said to take place from a financed the Zanu PF district office which location in Hillside, Harare, off the organised the violence in the district;32 Chiremba Road; - in Makoni South a CIO operative - the training of South Sudanese was allegedly in charge of a local base at intelligence operatives by the CIO at the which an MDC supporter was beaten;33 CIO Training Academy in St Patricks Rd, - in Nyanga North a CIO operative Hatfield in Harare, and in Juba, South was in charge of the DDF Ruwangwe Sudan.30 base from where MDC supporters were allegedly intimidated;34 The existence of Operation Spiderweb - a CIO official was sued by the has been independently confirmed by a Director of the Zimbabwe Peace Project, senior Zimbabwean government official. Jestina Mukoko, for his alleged role in We have not been able to corroborate her abduction and torture in 2008.35 the existence of other programmes, including Operation Black Hawk. More recently, unconfirmed news reports Moreover, even if these programmes have identified CIO agents using Nissan exist, it is difficult to directly link one pick up trucks in a number of alleged source of finance with a particular human rights violations: programme as funding can be fungible. - In January 2012 a mechanic, Further, even if true, there is no evidence Bornface Mvemve, was test driving an to suggest that Sam Pa was aware of MDC owned vehicle in Msasa, Harare. It how his donation was spent, although he was reported that, as he was driving, a could have reasonably foreseen such grey Nissan Hardbody double cab with expenditure, given the poor reputation of no number plates overtook his car and the CIO. Nevertheless, if it is true that suddenly blocked his way. Three men the CIO is engaged in covert activities to assaulted him, poured beer over him, discredit senior politicians from the smashed the MDC vehicle’s windows Movement for Democratic Change, then and then left the scene.36 this has the propensity to directly - In January 2011 an MDC activist undermine Zimbabwean democratic Julius Mutavira Gono of ward 10, processes and institutions. Madzimure village, Chiredzi South constituency was reported to have been Sam Pa’s apparent financial support beaten in broad daylight by three for the CIO could fund future human members of the CIO who drove to his rights abuses house in a Nissan twin cab with unmarked plates.37 It is also possible that off-budget - In August 2011 three CIO agents financing of the CIO could fund future who were reported to be intimidating human rights abuses in the run up to the MDC activists ahead of constitutional next election. Local human rights groups outreach meetings in the Chipinge, have compiled detailed reports setting Chipinge South and Musikavanhu

11 Global Witness | Financing a parallel government? | Zimbabwe | June 2012 constituencies used white Nissan double is impossible to know whether these are cabs with the registration plates the same vehicles donated by Sam Pa to ABM****, ABM****, and ABM****. the CIO. After the exposure of these registration details by SW Radio Africa the number The next election will inevitably lead to plates were removed by the CIO.38 heightened political tensions. While abuses are not inevitable, ZANU PF’s use While there are some similarities of violence as an electoral strategy at between these reports (for example, the past elections means that there is a risk ABM number plates seen in both that CIO agents will be deployed to Bulawayo and Chipinge – see page 7) it intimidate and attack political opponents.

Figure 5: CIO operative photographing Global Witness staff during Kimberley Process Review mission to Zimbabwe, 2010

Recommendation

Global Witness believes that the activities of Sam Pa, Sino Zimbabwe Development (Pvt) Ltd and Anjin Investments (Pvt) Ltd should be investigated by relevant authorities to see if their actions undermine Zimbabwean democratic institutions or risk funding future human rights abuses and therefore meet the threshold* for being placed on targeted sanctions lists.

* Executive Order 13469, setting out the basis for including someone on the U.S. sanctions list ,includes those persons or entities determined “to be owned or controlled by, directly or indirectly, the Government of Zimbabwe or an official or officials of the Government of Zimbabwe … to have engaged in actions or policies to undermine Zimbabwe’s democratic processes or institutions … to be responsible for, or to have participated in, human rights abuses related to political repression in Zimbabwe … to be engaged in, or to have engaged in, activities facilitating public corruption by senior officials of the Government of Zimbabwe … to have materially assisted, sponsored, or provided financial, material, logistical, or technical support for, or goods or services in support of, the Government of Zimbabwe, any senior official thereof, or any person whose property and interests in property are blocked …”.

EU Council Regulation 314/2004 includes Article 2 which states: “It shall be prohibited … to provide financing or financial assistance related to military activities, including in particular grants, loans and export credit insurance, for any sale, supply, transfer or export of arms and related materiel, directly or indirectly to any person, entity or body in, or for use in Zimbabwe.” Article 6 of the Regulation states “All funds and economic resources belonging to individual members of the Government of Zimbabwe and to any natural or legal persons, entities or bodies associated with them as listed in Annex III shall be frozen. … No funds or economic resources shall be made available, directly or indirectly, to or for the benefit of natural or legal persons, entities or bodies listed in Annex III. … The participation, knowingly and intentionally, in activities the object or effect of which is, directly or indirectly, to promote the transactions referred to [above] shall be prohibited.” It is to Annex III, a list of sanctioned individuals and entities, to which we argue Sam Pa, Anjin and Sino Zimbabwe Development should be added.

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3. Off-budget funding of the military by Anjin?

Global Witness previously wrote about After Operation Hakudzokwi, the Anjin Investments (Pvt) Ltd in our government began to grant concessions briefing Diamonds: A Good Deal for in Marange. The first to receive Zimbabwe? Here we restate some of the concessions were two previously evidence setting out the extent of unknown firms named Mbada Diamonds Zimbabwean military and police control (Pvt) Ltd and Canadile Miners (Pvt) Ltd. of the company and introduce new Fifty percent of Mbada is owned by evidence on the ownership of Anjin. This Grandwell Holdings registered in section first explains the controversy Mauritius, and 49.99 per cent of surrounding Marange diamonds. Second, Grandwell is now owned by Transfrontier we describe how Anjin is ostensibly a Mining, in turn owned by a network of joint venture between a previously companies registered in secrecy unknown Zimbabwean company and a jurisdictions.40 Canadile soon collapsed Chinese construction firm. Third, we and its concession was taken over by reveal that half of Anjin’s shares are held Marange Resources (Pvt) Ltd, wholly by Zimbabwe’s Judge Advocate General owned by the parastatal Zimbabwe and set out our belief that these shares Mining Development Corporation are held on behalf of the Zimbabwean (ZMDC). Press reports indicate that the Ministry of Defence. To conclude, we new chair of Marange Resources is assess a new claim that Anjin has not retired Colonel Tshinga Dube, head of paid any taxes to the MDC controlled Zimbabwe Defence Industries (an entity Ministry of Finance. which is on the EU and US sanctions lists).41 The situation in the Marange diamond fields has evolved from small scale More recent concessions include Sino mining accompanied by violence, to Zimbabwe Development (Pvt) Ltd (who large modern mining operations are reported to have left their granted concessions in controversial concession, and whose activities are circumstances described in more detail in annex 1); Diamond Mining Corporation, a joint The discovery of diamonds at Marange in venture between the ZMDC and Pure 2006 resulted in the arrival of many Diam, a company registered in Dubai, thousands of small scale miners. This United Arab Emirates; and Anjin period was characterized by violence, Investments (Pvt) Ltd.42 smuggling, corruption and intimidation of diamond diggers. In the autumn of 2008 There are now four companies mining the government launched Operation diamonds in earnest in Marange: Mbada, Hakudzokwi or ‘You will not return’ – Marange Resources, Diamond Mining designed to secure the Marange diamond Corporation and Anjin. These are fields for government control. Soldiers, established operations using up-to-date police and helicopter gunships were technology, with modern security deployed, resulting in the killing and protocols. wounding of many artisanal miners.39

13 Global Witness | Financing a parallel government? | Zimbabwe | June 2012

Figure 6: Marange diamond fields, concession blocks

Key - Anjin operates in block C and Eii. - Mbada operates in block A, P, the top half of concession block I, and an area North of block A and I - Diamond Mining Corporation operates in blocks Ei, and F. - Sino Zimbabwe operated in blocks H and D. - Marange Resources operates in block B, K, J and G, and the bottom half of block I.

Anjin is ostensibly a joint venture the terms of the loan include a provision between Matt Bronze (Pvt) Ltd and a for repayment of the debt using revenues Chinese construction company from Anjin.44

Anjin Investments (Pvt) Ltd is a joint The letter below from the Zimbabwean venture between Matt Bronze (Pvt) Ltd, a Ministry of Mines describes Matt Bronze previously unknown Zimbabwean firm, as the company “which the Zimbabwe and Anhui Foreign Economic Construction Minerals Development Corporation Group (AFEC(G)), a large Chinese (ZMDC) used to cooperate and sign construction company. agreements with Anhui Foreign Economic Construction (Group)”. In Zimbabwe AFEC(G) is building a new National Defence College. The deal is financed by a US$98 million loan from the Chinese state-owned Exim Bank43 and it has been reported in the press that

14 Global Witness | Financing a parallel government? | Zimbabwe | June 2012

Figure 7. Letter from Ministry of Mines to Anjin, 2010

Global Witness has visited the Other directors, shareholders and Zimbabwean company registry to look at beneficial owners of Matt Bronze are not the records for Matt Bronze (Pvt) Ltd. recorded. The following paragraphs set The directors there are listed as Mr. out the reasoning for our belief that Matt Shelton Wandai Kativhu and Ms. Bronze is a front company for the Pennelope Rujeko, two individuals who Zimbabwean Ministry of Defence, military have no public profile in the mining and police. sector. The company was incorporated on 24 April 2008, and records its address as the 9th Floor, Travel Centre, Corner of 3rd St and Jason Moyo Avenue, Harare.

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Half of Anjin’s shares are held by a of Defence at the time of Russzim’s Zimbabwean military lawyer… incorporation, advising that a waiver of registration fees has been granted. The company records for Anjin itself are revealing. Anjin Investments (Pvt) Ltd’s …and Anjin’s executive board is partly directors are listed at the registry as controlled by the Zimbabwean police, Jiang Zhaoyao, Chen Qing, Peng Zheng, military, and Ministry of Defence Li Zhongqi, Huang Xianjue, all with Chinese nationality. The only The Chinese members of the executive Zimbabwean director listed is the board Mr. Jian Qingde, Mr. Jiang Diaru, company secretary and principal officer, Mr. Tian Shiyue, Mr. Jiang Zhaoyao, and Brigadier-General Charles Tarumbwa. An Mr. Li Renfu, Mr. Zhang Shibin and Ms. affidavit records a resolution making Lu Qingxia.48 Anjin a joint venture between Matt Bronze (Pvt) Ltd, the principal officer of The Zimbabwean executive board which is Tarumbwa, and Anhui Foreign members of Anjin are: Economic Construction (Group). The - Mr. Martin Rushwaya, the agreement was signed by Peng Zheng on permanent secretary in the Ministry of behalf of AFEC(G) and Tarumbwa for Defence;49 Matt Bronze. The company register also - Mr. Oliver Chibage, a states that Anjin’s share capital is made commissioner in the Zimbabwe Republic up of US$2,000, consisting of 2,000 Police (ZRP);50 ordinary shares, which are shared equally - Ms. Nonkosi M. Ncube, a between Tarumbwa and Zheng. commissioner in the ZRP;51 - Mr. Munyaradzi Machacha, a So who is this Brigadier General Charles ZANU PF director of publications;52 Tarumbwa, who owns half of Anjin? In - Mr. Mabasa Temba Hawadi, a 2006 the United Nations listed Tarumbwa director of Marange Resources (Pvt) Ltd, as Judge Advocate General at the a subsidiary of the ZMDC;53 Ministry of Defence.45 In 2011 the - Mr. Morris Masunungure, a International Committee of the Red Cross current or retired officer in the Zimbabwe records his identity as a military lawyer at Defence Forces (ZDF);54 the Ministry of Defence.46 Tarumbwa is - Mr. Romeo Daniel Mutsvunguma, listed on the current EU sanctions list a retired colonel in the ZDF alleged by because he was “directly involved in the Human Rights Watch to have terror campaign waged before and during participated in violence in 2008.55 the elections” in Manicaland and Mutare South.47 We wrote to Anjin Investments to give them a chance to comment on the Tarumbwa played a role in a past makeup of their board. Anjin’s (Chinese) attempt to set up a military owned joint General Manager replied that venture. He is also the company “Zimbabwean members of the executive secretary for Russzim Mining, a company board of Anjin Investments (Pvt) Ltd are registered in 2006. Company records for appointed by Zimbabwean government. Russzim Mining includes correspondence Chinese side [sic] pays close attention to from Zimbabwe Defence Industries (ZDI) the operation management and partner’s registering Russzim as a joint venture, cooperation of the company, as for the and appointing retired Colonel Tshinga status and political background of Dube (head of ZDI) to sign articles of Zimbabwean members, it is not association with Russzim. The records reasonable for us to investigate or also include a letter from T.K. Maphosa, research. Please kindly understand.”56 the Permanent Secretary at the Ministry

16 Global Witness | Financing a parallel government? | Zimbabwe | June 2012

Figure 8. At the occasion of the granting of the mining licence Anjin executives meet President Robert Mugabe and Minister of Defence Hon. Emmerson Mnangagwa.

It is possible that the Marange Global Witness believes that Anjin is concession was granted to Anjin by part owned and part controlled by the the Defence Minister Emmerson Zimbabwean military, police and Mnangagwa, a front-runner to succeed Ministry of Defence President Mugabe It is possible, just, that Matt Bronze is a It has been alleged by an MDC genuine mining company which owns half parliamentarian that Anjin’s mining of Anjin. It is also possible that Brigadier concession was granted by Defence General Tarumbwa owns half of Anjin’s Minister Emmerson Mnangagwa when shares in a personal capacity, or on behalf the minister of mines was on leave and of well connected individuals. However, Mnangagwa was acting Minister of Global Witness believes that it is more Mines.57 Mnangagwa is one the front likely that Matt Bronze is a front for the runners to succeed 88 year old President military and police as corporate entities. Robert Mugabe as the leader of ZANU PF, Factors such as Tarumbwa’s formal role and recently declared that he was “ready as a senior law officer at the Ministry of to rule”.58 Global Witness has not been Defence, the involvement of Tarumbwa able to independently confirm that it was and the former Permanent Secretary of Mnangagwa who granted the licence but, the Ministry of Defence in the as can be seen from the photo above, he incorporation of Russzim, the presence of was present when Anjin was granted its the current Permanent Secretary on mining licence. Anjin’s Executive Board, and the possible role of Defence Minister Mnangagwa in Global Witness put this allegation to Anjin granting the mining licence, lead us to Investments, who said instead that conclude that Anjin is likely to be part- President Mugabe granted the owned and part-controlled by the concession: “We hereby explain that Zimbabwean military, police and Ministry Anjin Investments (Pvt) Ltd was awarded of Defence. a concession in the Marange diamond fields, the concession was issued by This claim is denied by Anjin who wrote to Ministry of Mines and granted by His us: “Anjin Investments (Pvt) Ltd has Excellence President Mugabe personally never been controlled by Zimbabwean by legal procedures.”59 military or police. It is AFECC and Matt

17 Global Witness | Financing a parallel government? | Zimbabwe | June 2012

Bronze (Pvt) Ltd that benefits from Anjin Global Witness put this complaint to Anjin Investments (Pvt) Ltd.”60 Investments. They responded that the allegation was “pure rumour” and Global Witness wrote to Anjin provided copies of payment vouchers to Investments to ask for their response to Global Witness. The vouchers indicate claims that they provide money to the that Anjin conducted four sales between Ministry of Defence, military and police. February and May 2012 totalling US They denied the allegation and wrote $93.2 million, and used those revenues “Such a phenomenon has never been to pay US$14.9 million in royalties and found during the operation of Anjin commissions to the Minerals Marketing Investments (Pvt) Ltd.” When confronted Corporation of Zimbabwe (MMCZ) and with the statement that the Ministry of $2.7 million in resource depletion fees to Defence, military and police are the real the Zimbabwe Minerals Development beneficial owners of Matt Bronze they Corporation (ZMDC). There was no wrote that “As for how the government- indication that any taxes had yet been related company Matt Bronze (Pvt) Ltd paid to the Zimbabwe Revenue Authority. distributes its benefits, Chinese side It may be that the MMCZ or ZMDC have knows nothing at all.”61 not yet passed on proceeds to the Zimbabwean Treasury. It is possible Finance Ministry reports non-payment that early revenues are being used to of taxes by Anjin recoup significant capital expenditures incurred by Anjin, said by Kimberley In Zimbabwe’s 2012 national budget the Process monitors to be $380m by late MDC-controlled Ministry of Finance set 2011 (for more on the Kimberley Process out expenditure totalling US$3.4 billion, see box 2).63 However, it is clear that, and specified that additional spending while payments have been made to the that would occur only if the Treasury MMCZ and ZMDC, the claim - that Anjin received US$600 million from diamond has not yet paid any taxes to the revenues promised by the ZANU PF- Zimbabwean Ministry of Finance - is controlled Ministry of Mines. plausible.

However, to date diamond revenues have Anjin is a large operation and should yielded little. In May 2012 the MDC generate significant profits for its Finance Minister stated that the Treasury owners had only received $30.4 million from diamond companies for the period 1 Kimberley Process monitors have noted January to 21 March 2012, and that Anjin that at present five independent had paid nothing to the Treasury since it processing plants are in operation at began trading: Anjin, with a further two plants under construction.64 Rapaport research, an We have not received a single industry analyst, reported that “the cent from Anjin, yet Anjin is concession owned by Anjin has seven times bigger than some production of 750,000 carats a month of the other (diamond) companies. that is expected to rise to approximately “Clearly, we fear as the ministry of finance 1.2 million carats a month after the that there might be a parallel implementation of two new processing government somewhere in respect of units.”65 A director of Anjin is reported to where these revenues are going, and are have claimed that it is now the world’s not coming to us. There is opaqueness largest diamond company: and unaccountability surrounding our diamonds.”62

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Global Witness initially dismissed such We are now the largest claims as bombastic, but one informed diamond company in the world industry observer has told us that, in and this has been confirmed by terms of size, Anjin could be “the next De “KPC [Kimberly Process Certification Beers.” If we are right in our analysis, scheme]. We are the largest diamond then the Zimbabwean military, police and mining company in the world because we the Ministry of Defence part-own and have surpassed the KPC minimum part-control half of a large and potentially requirements. We are the largest in very profitable diamond company. terms of the size of our area of operation and the amount of ore we are capable of processing every day. We are also large in terms of the field, we have got the largest deposits in the world.”66

Recommendations

Global Witness believes that the activities of Anjin Investments (Pvt) Ltd should be investigated by relevant authorities to see if their actions undermine Zimbabwean democratic institutions or risk funding future human rights abuses and therefore meet the threshold for being placed on targeted sanctions lists.

The MDC Finance Minister’s allegation that “there might be a parallel government somewhere in respect of where these revenues are going” is a serious accusation, with profound consequences for Zimbabwe’s Government of National Unity. The Southern African Development Community (SADC) plays an active role in mediating the political process in Zimbabwe. SADC facilitators should give the problem of off-budget financing of security forces a high priority in forthcoming negotiations, with the aim of securing democratic, civilian control over the budgets for the security services. It may also be necessary for SADC to appoint an expert panel to investigate these claims.

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Box 2: Regulation of the diamond industry

The Kimberley Process (KP) is a certification scheme for rough diamonds set up in 2003 to prevent diamond-fuelled conflict and human rights violations. Global Witness invested over ten years in establishing the scheme and attempting to make it effective. However, the scheme is no longer fit for purpose and Global Witness left the KP in 2011. Among the reasons for our withdrawal are: first, the definition of conflict diamonds is asymmetric – only applying to rebel groups, not governments such as Zimbabwe which commit human rights abuses. Second, the KP only applies to part of the supply chain, covering rough diamonds not polished gems. Third, the scheme has failed to enforce its own rules and deals, including not dealing effectively with conflict diamonds from Côte d’Ivoire, and rule breaking by Venezuela. While the United States has taken the chair of the Kimberley Process promising reform, we remain sceptical that a club which includes states such as Zimbabwe, and which requires unanimous agreement on any rule change, will implement effective reforms.

The most egregious failure of the KP over the past three years relates to Zimbabwe. The scheme has given the green light to diamond exports from several opaque joint venture companies operating in the area, including Anjin, Marange Resources, Diamond Mining Corporation, and Mbada. (Sino Zimbabwe Development never went into full production and so was never certified.) Kimberley Process monitoring inspectors investigated security and anti-smuggling procedures at firms such as Anjin, but never asked about the true beneficial owners of these companies, nor about revenue flows. This blind spot allows KP members, for example, to permit exports from Anjin, a company part-controlled, and part-owned, by the Zimbabwean military and police.

Global Witness believes that diamonds should be brought into the supply chain due diligence frameworks applicable to other conflict minerals. Such frameworks could cover the whole supply chain, could engage industry in the process, and would not be restricted to the narrow KP definition of a conflict diamond. Due diligence frameworks would encourage and require companies to know: who their suppliers are, under what conditions diamonds are mined and processed, and who benefits financially from their production and sale. Such a framework would require diamond companies to have a conflict minerals policy; to conduct supply chain risk assessments, including on-the- ground checks on suppliers; to take remedial action to deal with any problems identified; to commission independent third party audits of their due diligence measures; and to publicly report results.

Recommendation:

Consumers wanting clean diamonds should not buy gems originating from the Marange mines until they can be certain they will not fund the Zimbabwean secret police, military and police. Companies should conduct due diligence investigations into the source of their rough diamonds. The Organisation for Economic Coordination and Development (OECD) has drawn up voluntary supply chain due diligence guidance for companies working in conflict-affected or high-risk areas. It has also drawn up ‘supplements’ setting out how such a framework should apply in the gold, tantalum, tungsten and tin sectors. For diamonds too OECD member states should ask the OECD to work with industry and other interested parties to draw up a ‘diamonds supplement’.

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4. Conclusions and recommendations

The violence perpetrated by ZANU PF The likely part-ownership and part- and partisan security forces in the 2008 control of Anjin by the Ministry of election followed similar outbreaks during Defence, military and police and the the elections of 2000, 2002 and 2005. apparent part-ownership and part-control Global Witness fears that the next of Sino Zimbabwe Development, by the election, due by summer 2013, may also CIO, create vehicles for off budget be accompanied by violence. The role of financing of the security sector and by its the military, police and CIO in past very nature this undermines Zimbabwean violence underscores the need for democracy. security sector reform. A crucial part of any reform must be civilian and Sam Pa appears to have provided a democratic control of the budgets of significant amount of money, which security organs. Off-budget financing according to a CIO document was allows security forces to set their own US$100m, to the secret police (this is a agendas and fund operations from their large sum: in 2011 the budget of the own resources. CIO’s parent department – the Office of the President and Cabinet – was The cabinet of a democratically elected US$121m). Together with the apparent Zimbabwean government should exercise provision of vehicles for use by the CIO, control of the Central Intelligence these actions undermine Zimbabwe’s Organisation’s budget, via the Ministry of democratic processes and institutions. Finance. This would allow the The CIO may have used this money to government to have oversight of the actively undermine senior MDC politicians CIO’s strategic direction and to ensure through covert activities under the that its activities match the priorities set codename “Operation Spiderweb”. by Zimbabwe’s National Security Council.

Recommendations to the international community

The activities of Sam Pa, Sino Zimbabwe Development (Pvt) Ltd and Anjin Investments (Pvt) Ltd should be investigated by relevant authorities to see if their actions undermine Zimbabwean democratic institutions or risk funding future human rights abuses and therefore meet the threshold for placing them on targeted sanctions lists.

1) The processes by which Sino Zimbabwe Development and Anjin Investments were awarded their Marange concessions were opaque. The ZMDC has claimed in public to be the joint venture partner for Sino Zimbabwe Development and Anjin (see annex 2 for more details).67 By falsely portraying itself as the joint venture partner in these deals, the ZMDC deliberately obfuscates the true beneficiaries of the Marange concessions currently held by Anjin and previously held by Sino Zimbabwe Development and intentionally provides cover for the Zimbabwean CIO, police and military. The ZMDC should be retained on targeted sanctions lists.

2) The Southern African Development Community (SADC) plays an active role in mediating the political process in Zimbabwe. SADC facilitators should give the problem of off-budget financing of security forces a high priority in forthcoming

21 Global Witness | Financing a parallel government? | Zimbabwe | June 2012 negotiations, with the aim of securing democratic, civilian control over the budgets for the security services. It may also be necessary for SADC to appoint an expert panel to investigate these claims of a parallel government.

3) The widespread use by the Queensway syndicate of companies registered in the British Virgin Islands, a secrecy jurisdiction, is designed to obscure the beneficial ownership of companies such as Sino Zimbabwe Development. In the case of Strong Achieve Holdings Ltd, Global Witness believes that the company is controlled by a member of the Zimbabwean secret police. The Financial Action Task Force, which is the intergovernmental body that sets the global anti-money laundering standards, should adopt a standard that requires every jurisdiction to collect and list publicly the beneficial ownership information for any company incorporated in that jurisdiction.

4) Diamonds traded by Sino Zimbabwe Development (Pvt) Ltd or Sam Pa may have financially benefited the Zimbabwean secret police. Similarly, Anjin diamonds may benefit the Zimbabwean military and police. Companies in the diamond supply chain should conduct due diligence investigations into the source of their rough diamonds and, if concerned, refuse to purchase diamonds sourced from Anjin, Sino Zimbabwe Development or Sam Pa’s Marange diamond buying operation.

The Organisation for Economic Coordination and Development (OECD) has drawn up voluntary supply chain due diligence guidance for companies working in conflict affected or high risk areas. It has also drawn up supplements setting out how such a framework should apply in the gold, tantalum, tungsten and tin sectors. For diamonds too OECD member states should ask the OECD to work with industry and other interested parties to draw up a supplement on diamonds.

Consumers should not buy diamonds originating from the Marange mines until they can be certain they will not fund the Zimbabwean secret police or military.

Recommendations for Zimbabwe’s Government of National Unity

5) Zimbabwe’s Government of National Unity (GNU) should pass legislation banning serving and recently retired members of the military, police, the CIO and other members of the security services from control over, or beneficial ownership of, mining companies.

6) The GNU should publish all mining concession contracts and other relevant agreements. The government should also immediately review all other contracts in the Marange diamond fields, and audit concession allocation procedures and operations conducted so far, to see whether they represent a good deal for Zimbabwe.

7) The GNU should design new transparent and fair concession allocation procedures designed to maximize public benefit.

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Annex 1: Activities of Sino Zimbabwe Development

In this section we set out the CIO documents seen by Global Witness Zimbabwean business activities of Sino reveal that Sam Pa has been buying high Zimbabwe Development (Pvt) Ltd, which quality diamonds sourced from Marange Global Witness believes to be a joint diamond mines from 2008 until at least venture between the CIO and Sam Pa of summer 2011.71 This was reported on the Queensway syndicate. contemporaneously in 2009 by Africa- Asia Confidential: “China International Sino Zimbabwe Development (Pvt) Ltd Fund moved to set up a purchasing has a small but not insignificant presence operation at the Marange diamond in Zimbabwe. The Queensway mines, which have been controlled by syndicate’s arrival in 2009 saw reports68 soldiers and bosses of the ruling of an US$8 billion deal involving: Zimbabwe African National Union- - the construction of a railway line Patriotic Front, in another example of its between Harare to Chitungwiza; brashness and political insensitivity.” 72 - improved electrification and The CIO documents describe how he signalling on the Harare-Gweru rail line; signed a two year contract to buy - improvements to Harare’s airport; diamonds in exchange for providing - an investment to restart gold funding for both the Zimbabwe Defence mining at the Connemara mine; Forces and the CIO73 and would arrive at - an US$500m partnership with the monthly intervals at Harare airport in a Reserve Bank of Zimbabwe, with its white Airbus A319CJ private jet subsidiary Fidelity Printers and Refiners, (registered as VP-Bex) and depart with to purchase gold from local miners.69 diamonds. The presence, but not the frequency, of this plane at Harare airport However, while Memoranda of can be corroborated using public Understanding were signed, few, if any, sources.74 of these projects materialised and reports of US$8 billion deals are overblown. In In a concession allocation process practice the Queensway syndicate’s involving no open bidding or presence in Zimbabwe centres around transparency Sino Zimbabwe three activities: diamonds, cotton, and Development (Pvt) Ltd was awarded a property deals. The following sections concession in the Marange diamond detail these business activities in turn. fields in early 2011, after which it embarked on a short period of Diamonds exploration.75 This phase, involving sampling of the concession area was led Several reliable sources have told Global by Samicor (the trading name for Sakawe Witness that Sam Pa has been involved Mining Corporation (Pty) Ltd, a company in two diamond-related operations: a registered in Namibia, and 76% owned buying programme, and a mining by Samicor BVI, which is in turn owned concession in the Marange fields. At the by LL Mining Corporation, registered in time of publication, in June 2012, Sino Israel. In an interview with Ha’aretz, an Zimbabwe Development still employs at Israeli newspaper, LL Mining is described least six individuals in Zimbabwe who as controlled by Lev Leviev, a diamond describe themselves as involved in the magnate.76 Samicor personnel Grant Rau diamond industry, including as cutters (Chief Geologist)77 and Eli Sher (Mine and polishers, indicating that the Manager)78 were active in the Sino company may still be involved in the Zimbabwe Development concession in diamond trade in some way.70 the Marange diamond fields.79 During

23 Global Witness | Financing a parallel government? | Zimbabwe | June 2012 this phase Zimbabwean cutters and terms of license Sino Zimbabwe Cotton polishers were recruited by Sino was obliged to comply with a number of Zimbabwe Development, and sent to conditions, including to operate within Namibia80 to be trained by LLD the common buying system and not to Diamonds, another company owned by buy seed cotton that had already been Lev Leviev.81 Global Witness has seen no contracted to other farmers. The evidence to indicate that Mr. Leviev, Mr. company was quickly embroiled in a legal Sher, Mr. Rau, Samicor, LL Mining dispute with the Cotton Ginners Corporation, or LLD Diamonds or their Association Zimbabwe (CGAZ), the directors or beneficial owners knew of organization which represents the the role of the CIO in Sino Zimbabwe Zimbabwean cotton industry. In July Development. 2010, CGAZ filed a case86 at the High Court, in which they accused Sino By April 2011 however Sino Zimbabwe Zimbabwe Cotton of purchasing cotton Development had ceased operations and already contracted to other companies filed an application for a new and violating the terms of their license. concession.82 By January 2012 the Sino Zimbabwe Cotton denied the company was reported to have left the allegations entirely. In a media report concession and claimed that its sampling Jimmy Zerenie, described as Sino showed that mining was not Zimbabwe Holding’s director, stated that economically viable in that zone. The the company had not “induced any parastatal Zimbabwe Mining contracted farmers to breach the law” Development Corporation has taken over and that the application had misled the the concession area.83 It is not known court.87 In the case against Sino whether Sino Zimbabwe Development Zimbabwe Cotton, the judge ruled that (Pvt) Ltd has been granted a new the case had been brought in the wrong concession. forum. CGAZ then made an application to the Cotton Marketing Technical Cotton Committee, asking them to withdraw Sino Zimbabwe Cotton’s license. During In June 2010 the Zimbabwean Cotton meetings between the parties, Global Marketing Technical Committee (CMTC), Witness was told that Sino Zimbabwe a statutory body under the Ministry of Cotton was represented by former (and Agriculture, granted a license to Sino one serving) members of the CIO.88 Zimbabwe Cotton Holdings (Pvt) Ltd to purchase cotton.84 Interviews with The dispute was settled out of court and several sources have confirmed that this Global Witness has seen no further firm is in effect the same company as evidence to suggest impropriety or Sino Zimbabwe Development (Pvt) Ltd; improper behaviour by Sino Zimbabwe Sino Zimbabwe Cotton Holdings (Pvt) Ltd Cotton Holdings in the cotton sector. also have been represented in the media by Jimmy Zerenie (also a director of Sino Property Zimbabwe Development (Pvt) Ltd). However, we have not been able to Sino Zimbabwe Development are reported locate the documents listing directors for in the press and in Zimbabwean Sino Zimbabwe Cotton Holdings (Pvt) Ltd government documents seen by Global at the company registry. Witness to have bought Livingstone House, Gecko Gardens hotel and In court documents several senior Zanu conference centre, Highlands Park Hotel, PF government officials are alleged to the Pangolin Lodge, and Imba Matombo have “spearheaded” the entry of the Lodge, all located in Harare.89 company into Zimbabwe.85 Under the

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Figure 9: Sam Pa is reported to travel in this private jet: A319 Airbus VP Bex

Photo courtesy of Jerome K via Flickr, Creative Commons license

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Annex 2: Structure of Sino Zimbabwe Development

In this section we describe the corporate Jimmy Zerenie holds 49 per cent of the structure, directorships and share capital of Sino Zimbabwe shareholdings of related companies – Development (Pvt) Ltd while Gift Kalisto first in Zimbabwe, then in Hong Kong, Machengete, owns the other 51 per and finally in Singapore and the British cent.91 Global Witness believes that Virgin Islands. Through this analysis we Machengete holds these shares on behalf identify which companies are controlled of the CIO rather than for his personal wholly or partially by members of the benefit, given his senior role in the CIO, Zimbabwean secret police. the presence of other CIO members as directors, and the funding which sources Zimbabwe: Sino Zimbabwe say Sam Pa gave to the CIO. Development (Pvt) Ltd Hong Kong: Sino Zim Diamond Ltd The Zimbabwe Mining Development Corporation (ZMDC) has claimed that Jimmy Zerenie is also a director of Sino Sino Zimbabwe Development is Zim Diamond Ltd, registered in Hong established as a joint venture with the Kong. The other director of this Hong ZMDC.90 However, in reality this claim Kong company is Eliezer Nefussy, an merely provides cover for the Israeli citizen resident in Namibia.92 Mr. involvement of CIO members. Nefussy is also director of Orient Treasure International Trading Ltd, which Sino Zimbabwe Development (Pvt) Ltd is registered in Hong Kong and owned in was incorporated in Zimbabwe on the turn by Samicor, registered in Namibia.93 14th May 2010. Its offices are at the 3rd Mr. Nefussy is also the Chief Executive of Floor Livingstone House, Samora Machel Samicor.94 The registered address of Avenue, Harare and 14 Selous Avenue, Sino Zim Diamond Ltd is 27/F, 8 Queen’s Harare. The Zimbabwean directors of Road Central, Hong Kong. Sino Zimbabwe Development (Pvt) Ltd are Gift Kalisto Machengete and Pritchard Global Witness has seen no evidence to Zhou (see section 2). The non- suggest that the CIO has any role in this Zimbabwean directors of Sino Zimbabwe Hong Kong company, Sino Zim Diamond Development (Pvt) Ltd are: Ltd, nor that the beneficial owners, - Lo Fong Hung, a Chinese citizen. directors or staff of Sino Zim Diamonds Ms. Lo is a director of at least sixty other Ltd, Orient Treasure International companies in the Queensway syndicate; Trading, or Samicor had any knowledge - Veronica Fung Yuen, a Chinese of any CIO involvement in ‘Sino citizen and director of at least thirty other Zimbabwe Development’. companies in the Queensway syndicate; - Jimmy Zerenie, with Singaporean As can be seen in figure 10, 80 per cent citizenship. of Sino Zim Diamond Ltd is owned by MIL Company Ltd, also registered in All of the non Zimbabwean directors Hong Kong at 27/F, 8 Queen’s Road record the same residential address, in Central, Hong Kong. The two directors Chisipite, Harare in company records. of MIL Company Ltd are Lo Fung Hong of One source told Global Witness that the Queensway syndicate and Moshe Masimba Ignatius Kamba (see section 2) Hallak, an Israeli citizen.95 Mr. Hallak is holds a leadership position in the also a director of five other companies company, however, it has not been registered in Hong Kong: Moshe possible to confirm this. International, Worldpro Development,

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Shine Star, Time Express, and LLD Asia. MIL Company Ltd is in turn owned by two Four of these are owned by a variety of companies registered in the British Virgin BVI-registered entities.96 The fifth, LLD Islands: Alero Ltd and Goal Achieve Holdings Asia, is wholly owned by LLD Diamonds Ltd. The registered address for Alero Ltd is Ltd, registered in Israel. The other Drake Chambers, Tortola, British Virgin Islands. director of LLD Asia is Moshe Leviev, Lev The registered address for Goal Achieve Leviev’s brother.97 Global Witness has Holdings Ltd is PO Box 957, Offshore seen no evidence to suggest that Moshe Incorporations Centre, Road Town, Tortola, Hallak, Moshe Leviev or Lev Leviev, or British Virgin Islands.98 Goal Achieve Holdings any staff or directors of their companies, Limited’s company number is 1511954, and it were aware of the role of the CIO in Sino was incorporated on 28 November 2008, by Zimbabwe Development. Offshore Incorporations Limited, a company formation agent.

Figure 10: Figure 1: Ownership structure of Sino Zimbabwe Development group and Sino Zim Diamond Ltd.*

Lo Fong Hung Veronica Fung Yuen

Owns Owns 30% 70%

Beijing Tian Qiao Cultural New Bright Int'l Dev Ltd (HK) Wu Yang Development Company (HK) Directors: Veronica Fung Yuen Lo Fong Hung

Owns Owns Owns 0.0001% 69.9999% 30%

Dayuan Int'l Development (HK) Directors: Veronica Fung Yuen Lo Fong Hung Owns 1% Owns 99%

China International Goal Achieve Alero Key Fund Ltd (HK) Holdings Ltd - companies controlled in part by CIO members Directors: Ltd (BVI) (BVI) Veronica Fung Yuen Lo Fong Hung Owns Owns 50% 50% Holds

Gift Kalisto Jimmy Strong Achieve Star Delight MIL Company Ltd Machengete Zerenie Holdings (BVI) Holdings (BVI) (HK) Authorised Authorised Directors: signatory: signatory: Owns Owns Lo Fong Hung 51% 49% Masimba Ignatius Lo Fong Hung Moshe Hallak Kamba

Sino Zim Development (Pvt) Owns Owns Owns Owns (Zimbabwe) 30% 70% 20% 80%

Directors: Lo Fong Hung Sino Zim Development Pte Veronica Fung Yuen (Singapore) Jimmy Zerenie Transferred Directors: Sino Zim Diamond Ltd $50m to (Hong Kong) Gift Kalisto Machengete Masimba Ignatius Kamba Pritchard Zhou Lo Fong Hung Directors: Alain Fanaie (joined late 2011)* Eliezer Nefussy Jimmy Zerenie

* Alain Fanaie only joined Sino Zimbabwe Development Pte, and other companies in the Queensway syndicate, in late 2011, after the events described in this report.

27 Global Witness | Financing a parallel government? | Zimbabwe | June 2012

Singapore: Sino Zimbabwe Development association for Sino Zimbabwe (Pte) Ltd Development Pte Ltd states that Lo Fong Hung is the authorised signatory for Star The other 20 per cent of Sino Zim Delight Holdings, and Masimba Ignatius Diamond Ltd (Hong Kong) is owned by Kamba is the authorised signatory for Sino Zim Development Pte Ltd, registered Strong Achieve Holdings (see figure in Singapore. The directors of this below). Strong Achieve Holdings has Singaporean company are: company number 1525656, and was Masimba Ignatius Kamba, Lo Fong Hung, incorporated on 23 March 2009 by and Alain Fanaie. Mr. Kamba gives his Offshore Incorporations Limited. The registered address as the 7th Floor, fact that Masimba Ignatius Kamba, Chester House, Corner of 3rd Street and someone who Global Witness believes is Speke Ave, Harare. Alain Fanaie is CEO a member of the CIO, is the authorised of China Sonangol, another of the signatory leads us to believe that the Queensway syndicate companies. It company is partially or wholly controlled should be noted that Mr Fanaie joined in by the Zimbabwean CIO. late 2011, after the events described in this report.99 There is nothing to suggest Star Delight Holdings is ultimately owned that Mr. Fanaie was aware that Masimba by companies in the Queensway Ignatius Kamba was a member of the syndicate (China International Fund, CIO, or aware of the role of the CIO in Dayuan International Development, New Sino Zimbabwe Development Pte Ltd or Bright International Development) and Lo Sino Zimbabwe Development Pvt Ltd. Fong Hung and Veronica Fung Yuen.101 Star Delight Holdings has company There is one record of a financial transfer number 1532737, and was incorporated between the Singaporean and on 21 May 2009, again by Offshore Zimbabwean companies, further evidence Incorporations Limited. of a link between the two companies. According to the 2009 accounts of Sino Zim Development Pte Ltd on 16 Recommendation November 2009 US$50 million was Representatives of the CIO are deposited into the Zimbabwean bank directors in Sino Zimbabwe companies accounts of Sino Zim Development Pte registered in Zimbabwe, Singapore, Ltd (the Singaporean company), to be and the British Virgin Islands. The held in trust for Sino Zimbabwe Financial Action Task Force, which is Development (Pvt) Ltd, the Zimbabwean the intergovernmental body that sets company. This sum of money is not the global anti-money laundering mentioned in the 2010 accounts of Sino standards, should adopt a standard Zimbabwe Development Pte Ltd. that requires each jurisdiction to Otherwise the Singaporean company was collect and list publicly the beneficial 100 dormant in 2010. ownership information for any company incorporated there. British Virgin Islands

Sino Zimbabwe Development Pte Ltd is owned by Strong Achieve Holdings Ltd (30 per cent) and Star Delight Holdings Ltd (70 per cent), both registered in the British Virgin Islands, also at PO Box 957, Offshore Incorporations Centre, Road Town, Tortola. The memorandum of

28 Global Witness | Financing a parallel government? | Zimbabwe | June 2012

Figure 11: Extract from Memorandum of Association for Sino Zim Development Pte Ltd (Incorporated in the Republic of Singapore)

Box 3: Lev Leviev and the Queensway syndicate

Lev Leviev is a diamond magnate well known for helping to break De Beers’ hold on the diamond market, particularly through his interests in the Angolan and Namibian diamond sectors. The US-China Economic & Security Review Commission’s report on the Queensway syndicate, describes how Lev Leviev’s companies purchased 10% of a Queensway syndicate company, Artfield Group Limited, and sold several New York properties to China Sonangol, including the old JP Morgan building on Wall Street.102 In May 2011 Leviev sold his 18% stake in Alrosa Co. Ltd’s Catoca diamond mine in Angola to China Sonangol.103

Although Eliezer Nefussy, Grant Rau, Eli Sher, Moshe Hallak, Moshe Leviev are associated with Lev Leviev’s companies, there is no evidence that they or Lev Leviev had any contact with Zimbabwe’s Central Intelligence Organisation, nor that they had knowledge of off budget financing provided by Sam Pa to the CIO, or knowledge of the presence of CIO members as directors of Sino Zimbabwe Development.

29 Global Witness | Financing a parallel government? | Zimbabwe | June 2012

1 Lloyd Sachikonye, When a State Turns on Its Citizens, 2011. 2 Human Rights Watch, Perpetual Fear, March 2011, p.4. 3 Global Witness visited the company registry in 2012, and there was no record of Security Self Reliance Enterprises. 4 Global Witness, Diamonds: A Good Deal for Zimbabwe?, February 2012. 5 Derek Matyszak, Research and Advocacy Unit, Zimbabwe’s Security Sector – Who Calls the Shots? 2011, and Southern Africa Report Profile, Zimbabwe Security Forces, July 2011. 6 In Zimbabwean statutes there are three glancing references to the organisation: - the Zimbabwean National Security Council Act where it is referred to as the “Department of State for National Security”; - the Rural District Councils Act where it is referred to as the “President’s Department”; - the Provincial Councils Act, where it is referred to as “the organization known as the Central intelligence Organization”. See Matyszak, ibid, available at http://www.researchandadvocacyunit.org/index.php?option=com_docman&task=doc_download&gid=107&Ite mid=90 (accessed 13 April 2012) 7 See The Standard, CIO agent accused of rape, 11 June 2012, available at http://www.thestandard.co.zw/local/35863-cio-agent-accused-of-rape.html, Zimeye, CIO spy arrested over ZIFA Boss kidnapping, 29 February 2012, http://www.zimeye.org/?p=47737; Newsday, CIO rot exposed, http://www.newsday.co.zw/article/2012-03-31-cio-rot-exposed, 31 March 2012; SW Radio Africa, MDC-T MP threatened by CIO over diamond revelations, http://www.swradioafrica.com/2011/10/31/mdc-t-mp- threatened-by-cio-over-diamond-revelations/ 31 October 2011, (all accessed 11 June 2012) 8 Ministry of Finance, 2012 Blue Book, http://www.zimtreasury.org/downloads/929.pdf (13 April 2012) 9 SW Radio Africa, CIO splash out US$5 million on 200 vehicles, 10 February 2010, available at http://www.swradioafrica.com/news100210/cio100210.htm (accessed 10 April 2012) 10 For further reading see US-China Economic & Security Review Commission, The 88 Queensway Group: A Case Study in Chinese Investors’ Operations in Angola and Beyond, 10 July 2009, available at http://www.uscc.gov/The_88_Queensway_Group.pdf; Economist, The Queensway syndicate and the Africa trade, 13 August 2011, available at http://www.economist.com/node/21525847; Chatham House, Thirst for African Oil, August 2009; Caixin, African Safari: CIF's Grab for Oil and Minerals, available at http://english.caixin.com/2011-10-17/100314766.html; Khadija Sharife, Africa: The Ties That Bind - China, Angola and Zimbabwe, 11 September 2009, available at http://allafrica.com/stories/201109300630.html and various blog posts at the China Africa Real Story blog, , available at http://www.chinaafricarealstory.com (all last accessed 5 April 2012.) 11 BBC News, Guinea and China 'agree big deal', 13 October 2009, available at http://news.bbc.co.uk/1/hi/8304418.stm (accessed 11 April 2012). 12 The deal is discussed in detail at Foreign Policy, Is China's Guinea deal for real?, 29 October 2009, available at http://blog.foreignpolicy.com/posts/2009/10/28/is_the_guinea_china_deal_for_real and China in Africa: The Real Story, Was Guinea Bought by Beijing? and China International Fund's New Bellzone-Kalia Guinea Deal, available at http://www.chinaafricarealstory.com/2010/03/earlier-this-week-chatham-house-british.html and http://www.chinaafricarealstory.com/2010/06/china-international-funds-new-bellzone.html respectively. (accessed 11 April 2012) 13 Economist, The Queensway syndicate and the Africa trade, 13 August 2011, available at http://www.economist.com/node/21525847 (accessed 11 April 2012). 14 Global Witness interviews, 2011 and 2012. 15 Grain Marketing Board, GMB Board Members Brief Resumes, available at http://www.gmbdura.co.zw/docs/Boardprofiles.pdf (accessed 3 April 2012). 16 Pritchard Zhou was a speaker at an event on “Operation Murambatsvina” in 2005 at the Institute of Security Studies, available at http://www.iss.co.za/pgcontent.php?UID=8249 (accessed 3 April 2012) 17 The Herald, Chiadzwa Impresses Civil Society, 9 March 2012, available at http://www.herald.co.zw/index.php?option=com_content&view=article&id=35999:chiadzwa-impresses-civil- society-&catid=38:local-news&Itemid=131 (accessed 3 April 2012). 18 See Zimbabwe Independent, Hopes looters will be prosecuted fade, 22 July 2010, available at http://www.theindependent.co.zw/local/27387-hopes-looters-will-be-prosecuted-fade-.html , Silverton Estate P/L HC 982/2010, High Court, available at http://cfuzim.org/index.php?option=com_content&view=article&id=373:silverton-estate-pl-hc- 9822010&catid=44:legal-cases&Itemid=91 (accessed 3 April 2012). 19 Land Abuse Exposed, The Newsletter of the Office the Prime Minister, 4 February 2012, available at http://www.zimbabweprimeminister.org/index.php?option=com_phocadownload&view=category&id=5:&down load=44:33&Itemid=85 (accessed 3 April 2012). 20 Conference in support of the Inalienable Rights of the Palestinian People, UNISPAL, 24-25 April 1998, http://unispal.un.org/UNISPAL.NSF/0/25A87B6320DFC1FF0525663A0064476A (accessed 20 May 2012).

30 Global Witness | Financing a parallel government? | Zimbabwe | June 2012

21 Statement to the Diplomatic Community, Governor of the Reserve Bank of Zimbabwe, 2 April 2004, which lists Kamba as a member of the Governor’s Advisory Board. 22 The Herald, New Noczim Board Appointed, 2 March 2006, available at http://www.zimbabwesituation.com/mar3a_2006.html#Z14 (accessed 3 April 2012) 23 Indonesian Minister of Foreign Affairs website, Indonesia Offers ASEAN Style Conflict Mediation, available at http://www.kemlu.go.id/_layouts/mobile/PortalDetail-NewsLike.aspx?l=en&ItemID=1559fc7e-3eed-4038- a1a1-1b706696a72e (accessed 15 May 2012) 24 Application to the CMTC in the matter between: Cotton Ginners Association and Sino Zimbabwe Cotton Holdings (Private Limited), pp. 52 (E2); 57 (E4), 59 (E5) 25 Application to the CMTC in the matter between: Cotton Ginners Association and Sino Zimbabwe Cotton Holdings (Private Limited), p.59(E6) 26 EU Sanctions list, available at http://www.hm- treasury.gov.uk/d/finsanc_zimbabwe_commission_reg151_210212.pdf; and US sanctions list, available at: http://www.treasury.gov/ofac/downloads/t11sdn.pdf (accessed 11 April 2012). 27 Global Witness interviews, 2011. 28 Global Witness interviews, 2011 and 2012. 29 See Global Witness, Diamonds: A good deal for Zimbabwe?, 2012. 30 Global Witness Interviews, 2012. 31 Sokwanele, Anatomy of Terror, 2011, appendices available at http://www.sokwanele.com/system/files/MUZARABANI%20NORTH%20AND%20SOUTH.pdf and http://www.sokwanele.com/system/files/MAZOWE%20NORTH.pdf (accessed 13 April 2012) 32 Sokwanele, Anatomy of Terror, 2011, appendices available at http://www.sokwanele.com/system/files/Mt.%20DARWIN%20SOUTH.pdf (accessed 13 April 2012) 33 Sokwanele, Anatomy of Terror, 2011, appendices available at http://www.sokwanele.com/system/files/MAKONI%20SOUTH.pdf (accessed 13 April 2012) 34 Sokwanele, Anatomy of Terror, 2011, appendices available at http://www.sokwanele.com/system/files/NYANGA%20NORTH.pdf (accessed 13 April 2012) 35 U.S. State Department, 2009 Human Rights report, Zimbabwe, http://www.state.gov/j/drl/rls/hrrpt/2009/af/135984.htm (accessed 13 April 2012) 36 The Zimbabwean, CIO agents attack mechanic, 18 January 2012, available at http://www.thezimbabwean.co.uk/news/zimbabwe/55736/cio-agents-attack-mechanic.html (10 April 2012) 37 The Zimbabwean, CIO brutally assaults MDC-T activist, 7 January 2011, available at http://www.thezimbabwean.co.uk/human-rights/36531/cio-brutally-assaults-mdc-t-activist.html (10 April 2012) 38 We have purposely obscured the last four digits of these registration numbers. SW Radio Africa, SMS news message throws Manicaland CIO into panic, 13 August 2010, available at: http://swradioafrica.com/news130810/sms130810.htm (accessed 10 April 2012). 39 See Global Witness, Return of the Blood Diamond, 2010, and Human Rights Watch, Diamonds in the Rough, June 2009. 40 Global Witness, Diamonds: A Good Deal for Zimbabwe?, February 2012. 41 Financial Gazette, Tshinga Dube named Marange Resources chair, http://www.financialgazette.co.zw/companies-a-markets/11761-tshinga-dube-named-marange-resources- chair.html. EU Sanctions list, available at http://www.hm- treasury.gov.uk/d/finsanc_zimbabwe_commission_reg151_210212.pdf; and US sanctions list, available at: http://www.treasury.gov/ofac/downloads/t11sdn.pdf (accessed 11 April 2012). 42 See Global Witness, Return of the Blood Diamond, 2010, and Diamonds: A Good Deal for Zimbabwe? 2012. 43 Minister of Defence, Hon. Emmerson Mnangagwa, Speech to Zimbabwean Parliament 31 May 2011. 44 "The related Zimbabwe side should establish an escrow account to secure the payment and repayment of the facility with revenue of Zimbabwe's side's benefits from Anjin Investments (Private) Limited. Anjin Investments is the joint venture set up by Zimbabwe side and Anhui Foreign economic Construction (Group) Corp Limited. An agreement on the escrow account should be signed by Zimbabwe sides and the lender for the purpose herein," Cited in The Financial Gazette, MDC-T Agrees to Mortgage Diamonds, 10 June 2011. 45 United Nations, Office of Disarmament Affairs, 2006, http://www.un.org/disarmament/HomePage/ODAPublications/OccasionalPapers/PDF/OP12.pdf (accessed at 30 May 2012) 46 ICRC, Table of National Committees on International Humanitarian Law, last updated 31 October 2011, http://www.icrc.org/eng/assets/files/other/national-committes-icrc-30-10-2011-eng.pdf (accessed at 30 May 2012) 47 European Union, External Action Service, Financial Sanctions in Force, http://ec.europa.eu/external_relations/cfsp/sanctions/list/version4/global/e_ctlview.html, (15 June 2012). 48 Corporate documents in possession of Global Witness, available on request, and Global Witness interviews, January 2012.

31 Global Witness | Financing a parallel government? | Zimbabwe | June 2012

49 Ministry of Defence website, http://www.mod.gov.zw/index.php?option=com_content&view=article&id=47&Itemid=53 (20 January 2012). 50 The Herald, “Support Unit nabs 29,000, recovers guns”, 23 December 2011, http://www.herald.co.zw/index.php?option=com_content&view=article&id=29871:support-unit-nabs-29-000- recovers-guns&catid=46:crime-a-courts&Itemid=138 (accessed 20 January 2012). 51 The Herald, Female police officers hailed, 12 October 2011, http://www.herald.co.zw/index.php?option=com_content&view=article&id=23539:female-police-officers- hailed&catid=38:local-news&Itemid=131 (accessed 20 January 2012). 52 The Herald, Bulawayo to host Zanu-PF conference, 2 September 2011, http://www.herald.co.zw/index.php?option=com_content&view=article&id=20185:bulawayo-to-host-zanu-pf- conference&catid=37:top-stories&Itemid=130 (accessed 20 January 2012). 53 Corporate documents in possession of Global Witness, available on request. 54 The Herald, Foreign Defence Attaches Donate 40 Books to ZDF, 17 September 2004, http://allafrica.com/stories/200409170338.html (accessed 20 January 2012). 55 Human Rights Watch, Zimbabwe: Bullets for Each of You, p.28, 2008. 56 Letter from Anjin Investments to Global Witness, 1 June 2012, copy held on file with Global Witness. 57 Hon. Chikwinya, Speech to Zimbabwean Parliament, 27 October 2011. 58 Zimbabwe Independent, I’m ready to rule, says Mnangagwa, 11 May 2012, http://www.theindependent.co.zw/local/35465-im-ready-to-rule-says-mnangagwa.html (21 May 2012) 59 Letter from Anjin Investments to Global Witness, 1 June 2012, copy held on file with Global Witness. 60 Ibid. 61 Letter from Anjin Investments to Global Witness, 1 June 2012, copy held on file with Global Witness. 62 AFP, Chinese firm not paying diamond proceeds to Zimbabwe: FM, 18 May 2012, http://www.google.com/hostednews/afp/article/ALeqM5iMCC7ABe6LsIaIQ4YPO6y8XXfw9Q?docId=CNG.737c3 4631ca379f2d8a2a5ef902157c8.661 (accessed 21 May 2012) 63 Kimberley Process, Compliance Verification Report on Anjin Investments, 2011. 64 Kimberley Process, Compliance Verification Report on Anjin Investments, 2011. 65 Rapaport, January 2012 Research Report. 66 Cited in Zimbabwe Chronicle, Anjin Now World’s Largest Diamond Producer, 16 December 2011 (last accessed 31 January 2012). 67 See for example speech by Godwills Masimirembwa, Chairman of the Zimbabwe Minerals Development Corporation, Illegal Sanctions: Challenges on Zimbabwe’s Mining Industry, The case of ZMDC, its subsidiaries, associated companies and joint ventures, 2011, available at http://www.euromoneyconferences.com/downloads/Canada11/ECONOMIC_SANCTIONS_CHALLENGES_ON_ZI MBABWE_(2).pdf (accessed 10 April 2012). 68 The Herald, Zimbabwe: Chinese Firms Pour Millions Into Country, 9 December 2009 and Africa Asia Confidential, All That Glitters is Mine, December 2009. 69 NAM news network, Zimbabwe’s Central Bank Launches $500m USD Gold Buying Programme, available at http://www.namnewsnetwork.org/v2/read.php?id=102923 (accessed 4 April 2012) 70 Public sources, available on request 71 Global Witness interviews, 2010 - 2012. 72 See Africa Asia Confidential, All That Glitters is Mine, December 2009: 73 Global Witness interviews 2010-12. 74 Public sources available to Global Witness, available on request. 75 The Standard, Another Chinese firm at Chiadzwa, 13 March 2011 available at http://www.thestandard.co.zw/business/28821-another-chinese-firm-at-chiadzwa.html (accessed 4 April 2012) 76 Ha’aretz, Living by the Leviev Method, 28 June 2004, available at http://www.haaretz.com/print- edition/business/living-by-the-leviev-method-1.126783 (accessed 14 June 2012) 77 Grant Rau Linkedin profile, available at http://www.linkedin.com/pub/grant-rau/29/b02/779 (4 April 2012) 78 Eli Sher Linkedin profiles available at http://www.linkedin.com/pub/eli-s/28/90b/396 (4 April 2012) 79 The Herald, Chiadzwa: President on fact-finding mission, 16 June 2011, available at http://www.herald.co.zw/index.php?option=com_content&view=article&id=12783:chiadzwa-president-on-fact- finding-mission&catid=37:top-stories&Itemid=130 (accessed 4 April 2012) 80 Public sources, available on request. 81 AFI Group, Company Management Bios, available at http://www.afigroup- global.com/company_management.htm (accessed 12 June 2012) 82 The Herald, Chiadzwa: President on fact-finding mission, 16 June 2011, available at http://www.herald.co.zw/index.php?option=com_content&view=article&id=12783:chiadzwa-president-on-fact- finding-mission&catid=37:top-stories&Itemid=130 (accessed 4 April 2012) 83 The Herald, ZMDC takes over Sino-Zim operations at Chiadzwa, 7 January 2012, available at http://www.herald.co.zw/index.php?option=com_content&view=article&id=30823:zmdc-takes-over-sino-zim- operations-at-chiadzwa&catid=38:local-news&Itemid=131 (accessed 4 April 2012)

32 Global Witness | Financing a parallel government? | Zimbabwe | June 2012

84 Application to the CMTC in the matter between: Cotton Ginners Association and Sino Zimbabwe Cotton Holdings (Private Limited), p. 50 85 Application to the CMTC in the matter between: Cotton Ginners Association and Sino Zimbabwe Cotton Holdings (Private Limited), p.59(E6) 86 Application to the CMTC in the matter between: Cotton Ginners Association and Sino Zimbabwe Cotton Holdings (Private Limited). 87 Zimbabwe independent, Cotton furore: Ministers accused of aiding Chinese firms, 29 July 2010 and BBC Africa, Trade body accuses Zimbabwean ministers of assisting Chinese firm, 30 July 2010 88 Global Witness interviews, 2011. 89 Global Witness research, Africa Asia Confidential, Trading Partners, April 2011, available at http://www.africa-asia-confidential.com/index.aspx?pageid=7&articleid=552 (accessed 4 April 2012) 90 See for example speech by Godwills Masimirembwa, Chairman of the Zimbabwe Minerals Development Corporation, Illegal Sanctions: Challenges on Zimbabwe’s Mining Industry, The case of ZMDC, its subsidiaries, associated companies and joint ventures, 2011, available at http://www.euromoneyconferences.com/downloads/Canada11/ECONOMIC_SANCTIONS_CHALLENGES_ON_ZI MBABWE_(2).pdf (accessed 10 April 2012). 91 Company records, Zimbabwean company registry. 92 Sino Zim Diamond Ltd Annual Return 2011. 93 Orient Treasure International Trading Ltd Annual Return 2011. According to the Namibian Ministry of Mine’s license information Samicor’s shareholders include: Samicor BVI 76% owned by LL Mining Corporation – Israel, Longlife Mining 10%, Government of Namibia 8%, National Youth Service 2%, Employees 4%. 94 He has also been associated in the media with other companies such as Namibian Minerals Corporation (NAMCO), LL Biofuel Namibia. 95 Hong Kong company records, held by Global Witness. 96 Moshe International’s other director is Lo Fong Hung and it is owned by China Sonangol Mining Ltd (BVI) (90 shares) and Action Gear Ltd (BVI) (9 shares). Worldpro Development’s other directors are Lo Fong Hung and Francisco de Lemos Jose Maria, and Manuel Domingo Vicente and it is owned by World Noble Holdings Limited (BVI). The other directors and owners of Shine Star are not yet listed at the time of writing. The other director of Time Express is Lo Fong Hung and the company is owned by Best Effect Holdings Ltd (BVI) and All Prime Holdings Limted (BVI). All these BVI companies are registered at PO Box 957, Offshore Incorporations Centre, Road Town, Tortola, British Virgin Islands. 97 See Ha’aretz, Leviev's diamonds to stay, but the rest of his businesses will leave, 1 January 2008, available at http://www.haaretz.com/print-edition/business/leviev-s-diamonds-to-stay-but-the-rest-of-his-businesses- will-leave-1.236334 (accessed 14 April 2012). 98 Hong Kong company documents on file with Global Witness. 99 Africa-Asia Confidential, China Sonangol is Open for Business, October 2011, available at http://www.africa- asia-confidential.com/index.aspx?pageid=7&articleid=645 and China Sonangol website, available at http://www.chinasonangol.com/eng/index.asp (accessed 4 April 2011). 100 Sino Zimbabwe Development Pte Ltd annual accounts 2010 101 Memorandum of association for Sino Zim Development Pte Ltd and other corporate documents held on file by Global Witness. The role of China International Fund is made clear by Sino Zimbabwe Development Pte Ltd annual accounts for 2010 which make clear that China International Fund is an intermediate holding company and New Bright International Development Ltd is the ultimate holding company. 102 US-China Economic & Security Review Commission, The 88 Queensway Group: A Case Study in Chinese Investors’ Operations in Angola and Beyond, 10 July 2009, available at http://www.uscc.gov/The_88_Queensway_Group.pdf 103 Bloomberg, Israel’s Leviev Sells 18% Stake In Angola Diamond Mine, Kommersant Says, 18 May 2011 http://www.bloomberg.com/news/2011-05-18/leviev-sells-18-stake-in-angola-diamond-mine-kommersant- says.html (accessed 21 May 2012).

Global Witness is a UK-based non-governmental organisation which investigates the role of natural resources in funding conflict and corruption around the world.

References to ‘Global Witness’ in this report are to Global Witness Limited, a company limited by guarantee and incorporated in England (Company No. 2871809).

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